February 6, 2018 / 4:13 PM / 8 months ago

UPDATE 1-China's Huawei builds British ties in face of U.S. cold shoulder

(Adds details on procurement deals; contrast to U.S. policy)

By Eric Auchard

FRANKFURT, Feb 6 (Reuters) - China's Huawei said on Tuesday it will spend a further 3 billion pounds ($4.2 billion) on procurement in Britain as the world's largest telecom equipment maker seeks alternatives to the United States, where it faces an effective ban.

Huawei said its chairwoman Sun Yafang made the pledge in a meeting last week with British Prime Minister Theresa May during a trade mission to China which resulted in deals worth more than 9.3 billion pounds (reut.rs/2EzkRUX).

Huawei Technologies has been deepening ties in Britain over the last decade and the British welcome is in stark contrast to the United States, where Huawei has been largely frozen out over thinly veiled national security concerns.

The procurement deals would include the global risk management and forex trading operations it runs out of London as well as patent licensing fees which Huawei, the world's No.3 smartphone maker, pays out to British technology firms such as chip designer ARM, now part of Japan's Softbank.

"I’m delighted to welcome their increased commitment to the UK," Britain's International Trade Secretary Liam Fox was quoted as saying in a Huawei statement, adding that the deal would be a boost to the British economy, which has been hit by Brexit.

"With 90 percent of global growth forecast to come from outside the EU, my international economic department is working to ensure Britain continues to benefit from the vast opportunities available as we leave the EU.”

Huawei said the new agreement builds on a 2012 pledge to spend 1.3 billion pounds between 2013 and 2017, which resulted in it actually investing or procuring 2 billion pounds during that five-year period. It employs 1,500 people in Britain.

The procurement pledge is distinct from business investments through which Huawei has become a major supplier of broadband gear for telecom operator BT Group and mobile networks for wireless giant Vodafone Group.

Last month, Huawei suffered a new setback in a bid to win new business in the United States, when U.S. lawmakers urged No.2 wireless carrier AT&T to cut commercial ties with it. Earlier in January, the carrier had backed off plans to introduce Huawei's flagship Mate 10 Pro into the U.S. market.

Five years ago, a British parliamentary committee questioned whether Huawei's position as a key supplier of communications networks equipment to BT raised national security issues.

The issue evaporated after Huawei issued a statement saying it enjoyed the full support both of the government and BT. ($1 = 0.7219 pounds) (Reporting by Eric Auchard; editing by Kate Holton and Alexander Smith)

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